Pleasantly surprised how cheap retirement is..

[Reproician]

Two years ago I was earning £70k and living very nicely on it.

Then stuff happened and I decided to take very early retirement. I have good pensions to come in 5 years' time, but meantime have some casual work which earns £4k pa and investment income of about £12k. I planned to live off savings to fill the gap and budgeted up to £20k pa.

Now, I realise I am very fortunate and I am definitely not claiming poverty. I realise being well set up and then moving to a lower income is entirely different to a lifetime lived on a low income. My mortgage is paid off etc, but I am finding I only need to draw on the saving for one off big purchases. I've drawn £6k altogether in 2 years.

I'm still living a good life. I still spend without thinking to hard on the things I want, I still have a busy social life, I still travel multiple times a year.

Being able to be fully flexible means everything is cheaper. I can at the time of the week/month/year when flights are cheapest etc. And the money I must have been spending on clothes, food, travel for work etc. PlusbI think when you're working hard there's a tendency to spend on "treats" that you don't feel the need for when lofe is.lore relaxed.

Just me and an adult son at home. He pays some keep, but I don't make any profit out of him.

But you are contributing with everything you buy (VAT is a lot), fuel tax, petrol tax, everything is taxed.

And if you have enough of an income you will pay tax. It's only about £12k a year before you have to pay it.

I also don't object to IHT as I think it helps to level the playing field and if you spend spend spend there's less of it to pay anyway. It's a tax on hoarders. It' a bit different if you die young but if you die in your 90s you had plenty of time to reduce your estate.

100% my thoughts.

And yet my mum would say the opposite - she found it much harder to make ends meet when she first retired than she does now. The triple lock has had its effect.

That said, I've helped her out now and again eg when she needed a new car I gave her the £10K for it (and she is still driving it 10 years on).

Your investment income bothers me a bit - doesn't this make you liable for tax? Mine certainly does (well, in fact I am over SP age so get taxed on my SP (which includes some SERPS stuff), earnings (about £5k a year) and investment income. If you have income above £12500, why aren't you paying tax?

I do agree with the basic precept, though. I've just done my tax return (I had a good reason to do it early) and income for the last year was about £34k. My savings slightly increased over that period despite buying a brand new car for cash.

No because it's all from ISAs

Its really reassuring to hear your experience @Reproician I'm not ready to retire yet, but I earn well but live modestly and I've always thought I needed so much less than what they quote for a "moderate" retirement! I think its the big and unexpected things that I worry about funding like holidays, house repairs/maintenance, cars, etc.

I found work had it's own costs!
No time to shop around for better deals.
Pressure to contribute to collections for colleagues, staff nights out (Xmas one was £90 last year), shared buffets all the time.
Even fines at the library as no time to get there.

All those are little savings now 🙂

This year I grew seeds instead of buying plants.
I've already made jam and chutneys for xmas stocking fillers. Weve had time to do our own decorating instead of hiring a workman in. We clean our own windows now. I go to the hairdresser on a weds when it's cheaper!
Took advantage of the National Trust free entry scheme to visit several places.
Had all the retired neighbours over for afternoon tea in the summer.

Yes we have a lot less money but I wouldn't go back to work if they paid me double the salary.

I also like that a young person has a job opportunity because I left.

Thomas Cook is ridiculously cheap for holidays! Shhhh 🙂

Good for you 😁thanks for sharing

Wish I was finding retirement cheap - but it isnt. Extra dental costs - will be over £1k extra this year, glasses, private tests and some private health care when the NHS is very slow, currently deciding whether to spend best part of £1k on a house repair or try to diy as we've already spent several thousands this year on a different repair. We need a new boiler too and next year there will be redecoration costs and probably more repairs. Last year it was a car as where we live we need something reliable. Extra heating costs as we feel the cold more and are in more.

When I’m having a bad work week, I research places around the world with low COL that I could move to and live off my investment income (which is nowhere near OP’s). I’d be limited to places like Vietnam or Guatemala, which are both wonderful tbf, but I’ve yet to make the leap. 🙃

Oh my gosh I’m so envious (but also pleased to have found this thread!). I’m 48 and desperate to retire - just had enough of the bullshit!

slight fly in the ointment is that we’ve 20.5 years to go on a high mortgage (but think we can possibly pay it off in half that time) and our kids are only 6&8, so really looking at 58 minimum. Husband is5 years younger so current plan is to stay FT for 10 years (ffs) then possibly drop to 3 days a week.

im slightly obsessed with worrying and calculating if we will have enough but our only extravagance is our home. The intention is to downsize once kids have left home and use remaining equity towards retirement.

I keep telling myself we are not extravagant folk generally, we cook mostly from scratch and think majority of our hobbies (walking, gardening, cooking, singing) will be largely free or cheap.

well, that’s what I’m hoping anyway as not sure I can even manage another 10 years, let alone longer!!

I think we’re in a similar position than you.
No mortgage, no children at home to feed, clothe etc…
dh works from home. I can’t work.
We spend similar amount than you wo being careful.

The huge difference is that you have a house.
Renting is what tilt a lot of retired people into poverty.

Im also going to point out what you have to live on is still more than the SP.

Yep.
As usual (that’s not just retirement), it’s easy to only need a low budget when you’re healthy.

I couldn’t add needing a cleaner or a gardener to that list too.

This is my issue. I have enough money to bridge the gap to state pension which is just under 10 years away but I'm terrified of dipping in to it.

I've been so focused on saving and looking to retirement now I'm actually here I'm struggling to get my head around spend not save.

AI has told me I can too, and given me data that makes total sense.

Do you need to pay off your mortgage, do you have any plans to downsize? My DH went interest only on part of our mortgage and upped our pension payments to benefit from the tax breaks and then cleared the mortgage with some of the 25% tax free sums we recieved?

I live frugally, total pension of around 18K - like @Reproician I'd budgeted for any extra to come out of savings, so I downsized to free up capital .... the big unexpected thing that swiftly ate into that ? - dental bills. Old crowns etc that were 30+yrs old needing replacing with implants. I really don't want false teeth and I certainly don't want the gaps my parents lived with. £35k + over the last 3yrs - another one being done next month. Then the car which seemed to be a really good buy 6yrs ago turning into a money pit before I pulled the plug and had to buy a new (second hand) one....

I find it easy to live frugally but the unexpected big expenses are a worry as the savings are finite - no matter how good a savings strategy you have they will get depleted.

Possibly not and that is something we considered but I don’t think DH will want to downsize until well into his 70’s so don’t want to have anything to pay when we retire. But we could do with adding more to pensions too.

definitely one for us to look into

We’re hoping to retire in a couple of years and our ‘essentials’ budget is really low, but as you say it’s the unexpected bigger one off bills like dental treatment, house repairs, vet bills. We’re about to incur a £4k vet bill for our dog. The insurance doesn’t cover the condition. I know being a pet owner is a luxury…

Unless your savings are all from ISAs, if your gross income is above around £13k, you should be paying some income tax. Do you complete a tax return?

I retired 20 + years ago at 52. I was quite ill. My DH retired and we went to live in Spain. We own our apartment and only run 1 car. We spend less than my private pension on day to day living. I have a gardener and cleaner. We save quite a lot each month and have some fantastic holidays. Within reason we gave anything
we want. I don't really know where the money used to go!
I used to spend quite a lot on shoes and suits, faster food etc. Even my permit to hunt for a parking space was 30 pounds a month!
For anyone thinking of retirement work how much you would have. Remember no NI ,or pension payments, still plenty of tax though.

I’m genuinely happy for you but this will never be me. I have never earned over 22k in my working life and I’m 59.
I am extremely fortunate to own my home or I would be screwed.
I wish I could retire because I’m not well but don’t have a big enough private pension.
im not going to begrudge anyone their retirement but I won’t pretend I’m not jealous 😄

Before I retired I did a one day course on retirement provided by my employer. The only thing I remember the trainer saying was that ‘most people find they have more money than they expected when they retire’. We all laughed at him but it has proved to be true. I don’t know why or how but my bank balance is much healthier that when I was at work. I don’t do anything outrageous but I manage 3 holidays a year and can afford my dentist and new glasses - both of which I really used to worry about.

No intention of our retirement being cheap
Living costs maybe
travel bill - god no!

I retired a year ago at 63. I spent a few years before that tracking outgoings and so it was straightforward to build a cashflow forecast from that. I actually managed to save enough to retire in the period after downsizing when the kids left home.

Some observations:

The pension fund I have performs better than the modelling tools allow you to input. I ended up creating my own spreadsheet.

Guiide is the best free one but still won't let you go over 8 percent and is a bit dramatic about market crashes. It's spelt with a double I.

Early sequencing risk is the thing to plan for. Having a year of income in cash will mean you don't have to draw down funds in bad market year.

The 4 percent drawdown recommended is far too cautious. So is the live to 100 plan.